LAN and TAM have completed their transaction and have officially created LATAM Airlines Group S.A.

Quote:LAN Airlines S.A. (which has been renamed LATAM Airlines Group S.A.) and TAM S.A. report that they have successfully completed the exchange offer and mergers through which they have combined their businesses and created the LATAM Airlines Group S.A. LATAM Airlines Group S.A. will offer passengers more flights to more destinations than any other affiliated group of airlines in South America, initially reaching about 150 destinations in 22 countries and transporting cargo to 169 destinations in 27 countries.

Quote:"The creation of this group of airlines is an opportunity to take South America to the world and to allow us to position ourselves to operate in an increasingly competitive environment due to the continuing consolidation of the global airline industry," said Enrique Cueto, Executive Vice President-CEO of LATAM Airlines Group.

"The growth LATAM Airlines Group is expected to generate will allow us to offer flights to new destinations for our customers, create more opportunities for our more than 51,000 employees and greater value for shareholders. In addition, we can support the economic, social and cultural development of our region, improving the connectivity of passengers and cargo in South America and the rest of the world," said Mauricio Rolim Amaro, Vice Chairman of TAM S.A.

Quote:LAN Airlines and TAM officially completed their merger under LATAM Airlines Group Friday, creating a mega-airline company that is expected to control more than 40% of the Latin American air passenger market.

Quote:A top executive with a Star member, however, told ATW that it is likely TAM will depart Star, though he noted it could take up to 18 months before the Brazilian carrier officially joins oneworld. He said that TAM will have to pay a $25 million fee to leave the alliance. Oneworld, on the other hand, does not have an exit fee.

Now that LATAM has swallowed up most of Latin America they should merge with AA. Hey AA merging with USairways is a worse option in my opinion. LAN does know how to run an airline. Just if Washington would change that pesky 25% foreign limit law.

1. LATAM's primary goal is to increase connectivity with-in South America by launching new regional routes and increasing frequencies on certain regional and domestic routes; and also to stimulate air travel with-in the region and into the region.
2. LATAM seeks to boost pax LFs and increase its cargo business particularly in Colombia and in Brazil.
3. LATAM seeks to open new international and domestic destinations from its hubs at BOG, BSB, GIG, GRU, LIM, SCL, etc.
4. LATAM seeks to offer seamless connections throughout their vast network offering passengers new options that were not available before the combination.
5. LATAM will increase competition in the region against rival Latin American carriers; as well as foreign carriers that operate into their hubs and focus cities.
6. LATAM seeks to offer their customers new products to enhance the travel experience. For example, LAN will introduce a new Premium Business Class and a new Economy Class on its fleet of wide-body a/c. TAM will introduce new First, Business and Coach class cabins on its fleet of wide-body a/c.
7. LATAM will operate newer and more efficient a/c.

Depends on which airline you are comparing them too. When looking at their largest competitor in South/Central America, no, LATAM is and will not be operating newer or more efficient aircraft. Not now and not in the future.

Nobody talks about alliances. But (if I'm not wrong) a court from Chile ruled that Lan and Tam would not be allowed to be members of the same alliance of Avianca/Taca (a full Star Alliance member since Jun 21, 2012). Therefore, this ruling puts Tam out of Star Alliance.

Quoting jrosa (Reply 9):Nobody talks about alliances. But (if I'm not wrong) a court from Chile ruled that Lan and Tam would not be allowed to be members of the same alliance of Avianca/Taca (a full Star Alliance member since Jun 21, 2012). Therefore, this ruling puts Tam out of Star Alliance.

Does anyone know if Tam will really leave Star Alliance?

If it will leave Star Alliance, when will it happen?

What's the future of Tam? One World or a non-alliance airline?

Yes, TAM can no longer legally remain in Star Alliance. The TDLC's ruling on the LAN-TAM merger has given TAM 24 months (starting April 2012) to exit Star and follow the requirements related to alliances. This also includes prohibiting the option of dual alliances (aka LAN cannot remain in OneWorld while TAM joins SkyTeam, etc).

As such, the scenarios will either be LAN remains in OneWorld and TAM remains unaligned, TAM joins LAN in OneWorld, or the combined carrier will exit the alliance realm entirely. Another possibility, although highly unlikely, is that the combined carrier exits and joins SkyTeam. While legal, I don't believe options 3 and 4 will occur in the slightest. #1 and 2 are far more likely.

OneWorld has far more to lose if LAN were to exit than Star will undoubtedly experience when TAM exits. Not only is TAM's membership in Star far newer, but also some of the loss will be recouped by the entrance of AV-TA and CM. Whereas with OneWorld, the relationships with LAN and other OW affiliates are far more entrenched and the connectivity between OneWorld hubs and LAN (SYD, MAD, DFW, MIA, LAX, JFK) are highly lucrative.

Quoting IrishAyes (Reply 16):OneWorld has far more to lose if LAN were to exit than Star will undoubtedly experience when TAM exits. Not only is TAM's membership in Star far newer, but also some of the loss will be recouped by the entrance of AV-TA and CM.

However, it should be noted that AV-TA-CM can hardly grow at GRU in order to provide feed to other Star carriers since the airport is highly congested. By acquiring TAM, LAN now has a major hub at GRU with a healthy portfolio of slots.

Some more information about LATAM Airlines Group S.A. LATAM would control 40% of passenger traffic within South America and would be the second largest airline "by passengers" after American Airlines on routes between South America and the U.S.

Quote:Airline consolidation took another step forward Friday with the stock-swap takeover of Brazilian airline TAM SA by Chile's LAN Airlines SA, creating South America's largest carrier by traffic, with an estimated market capitalization of $13 billion, the largest of any airline in the world. The new company, Latam Airlines Group SA, encompasses airlines in six South American nations and has four major hubs—São Paulo, Lima, Santiago and Bogotá. Latam would control 40% of the passenger traffic within South America and be the second-largest airline by passengers after American Airlines on routes to the U.S. and third-largest to Europe.

LATAM's CEO states that the "combined capacity" of LATAM will allow the airline to leverage agreements with U.S. and European airlines:

Quote:Enrique Cueto, Latam's chief executive, said the combined capacity puts the airline in a better position to negotiate network agreements with U.S. and European airlines. "Every airline is trying to fly to Brazil or Latin America," he said, and will need Latam flights to connect to cites across South America. "This is a growth merger," said Mr. Cueto. It gives LAN access to the Brazilian market, the largest in the region. Only 3% of the two airlines's routes overlap, mainly on flights from São Paulo to Santiago and Buenos Aires. It also brings LAN's regional affiliates in Peru, Argentina, Ecuador and Colombia into the combined company's mix, offering opportunities to route their passengers to TAM's flights.

LATAM's CEO reiterates that LATAM needs "strong partners" both in the U.S. and in Europe:

Quote:LAN is a member of Oneworld, a group that includes AMR Corp.'s American Airlines and British Airways and Spain's Iberia. Latam was expected to move TAM into Oneworld. Mr. Cueto said on Friday that a final decision hasn't been make. "We need very strong partners in the U.S. and Europe. We will negotiate to get the best deal. If they are in the same alliance, bingo, easy decision for us." If not, "we have to think about what is best for us." He said it isn't a foregone conclusion that Latam will stay in Oneworld and said there are several options.

*Negotiations have been going on for over eight years to create LATAM!

*LATAM is focused on lowering its debt ratio and generating synergies immediately. LATAM will not discuss its current profits. However, both LAN and TAM posted profits during Q1 as separate entities.

*The alliance options are still open, LATAM could join OneWorld, TAM may stay unaligned, or LATAM may consider joining SkyTeam.

*When Brazil increases foreign ownership laws to reach 49% of foreign investment; LAN's CEO states that LAN will increase ownership in TAM up to the maximum cap.

*In the short term, LATAM is not planning on opening a new hub. LATAM is focused on increasing connectivity at existing hubs. LATAM states that there's strong potential in launching new regional routes within South America; as well as the possibility of launching new long-haul routes from its hubs at BOG, BSB, GIG, GRU, LIM, and SCL.

Quoting RAGAZZO777 (Reply 20):Interesting development. I wonder if we can expect some new routes from LATAM's main hubs in the near future.

LATAM is increasing frequencies and capacity on routes from BOG, BSB, GIG, GRU, GYE, LIM, SCL, UIO, etc. LAN Colombia recently launched BOG-GRU 2x weekly and will increase frequency to 6x weekly in September and plans to launch BOG-MAD daily. TAM will increase frequencies on the BSB-MIA, CNF-MIA, GIG-JFK, GIG-FRA, and GIG-CDG routes all to daily services. TAM also plans to launch GIG-MCO daily. LAN will increase frequency on the SCL-COR, SCL-GRU, SCL-GIG, SCL-EZE, SCL-MIA, SCL-MVD, SCL-CUN-MIA, SCL-PUJ-MIA, LIM-LAX, LIM-MIA, LIM-JFK, and LIM-UIO routes. With 2K cutting domestic and international flights in Ecuador, LAN Ecuador will increase frequencies on domestic routes within Ecuador dramatically, i.e. the UIO-GYE and UIO-CUE routes. The GYE-JFK route will also increase to 11x weekly as well. LAN has also publicly mentioned that it is interested in opening direct routes between SCL and both BCN and FCO with the B-787s.

Quoting SCL767 (Reply 9):However, it should be noted that AV-TA-CM can hardly grow at GRU in order to provide feed to other Star carriers since the airport is highly congested. By acquiring TAM, LAN now has a major hub at GRU with a healthy portfolio of slots.

I'd argue that it's a double-edged sword. On one hand, it is a victory for LAN to now have a hub at GRU with a healthy portfolio of slots; however, on the other hand the growth opportunities in SAO are obviously limited. Moreover, as part of the second phase of the AV-TA integration into Star, Avianca-Brasil will be making its way into the alliance, which will obviously provide some leverage for Star into Brasil.

Whereas for AV-TA-CM, the only challenge with slot restrictions will occur at BOG (correct me if I am wrong). While arguably Brazil is the more important market, AV-TA and CM will dominate the Colombian market as well as PTY, a critical link for intra-American traffic. Hopefully, LAN Colombia will continue to grow and be integrated into OneWorld at some point, increasing OW's footprint in the Northern Latin America realm.

Regardless, all the moving parts in Latin America will be VERY interesting to watch over the years. AR joining ST soon, and G3 moving closer to DL. To a smaller degree, the merger between Azul and TRIP, as well as the other integrations of smaller subsidiaries into the larger alliances.

I may have missed the answer to this somewhere, but are there any plans to streamline the LA/JJ brands into one? I think LATAM in the current LAN branding would definitely be the more appealing option.

Quoting IrishAyes (Reply 14):I'd argue that it's a double-edged sword. On one hand, it is a victory for LAN to now have a hub at GRU with a healthy portfolio of slots; however, on the other hand the growth opportunities in SAO are obviously limited.

The benefit of dominating GRU far outweighs the downside of limited growth.

Quoting IrishAyes (Reply 14):...AV-TA and CM will dominate the Colombian market.... Hopefully, LAN Colombia will continue to grow and be integrated into OneWorld at some point, increasing OW's footprint in the Northern Latin America realm.

AV's domination of Colombia will only go unchallenged for a limited period of time. 4C should be adding 15 aircraft this year. In addition, LA will continue to leverage their presence from the rest of S. America into Colombia to bolster their visibility since LAN appears as one brand. That said I don't expect much to happen with 4C for the foreseeable future as LAN has to finish integrating JJ.

Quoting IrishAyes (Reply 14):I'd argue that it's a double-edged sword. On one hand, it is a victory for LAN to now have a hub at GRU with a healthy portfolio of slots; however, on the other hand the growth opportunities in SAO are obviously limited.

While GRU is slot restricted and severely congested we might see LAN Cargo transferring cargo flights completely over to VCP. Also, TAM may increase capacity on certain domestic and international flights at GRU, and may decrease frequency on certain domestic flights in order for LATAM to increase international flights. CGH is also dominated by TAM. TAM may focus on increasing international flights from other Brazilian airports, including BSB, CNF, and especially GIG. TAM is increasing frequencies on certain flights from GIG and will launch new international routes from GIG. JJ plans on launching GIG-MCO later this year.

LATAM is spread out throughout the continent and maintains flexibility in growing their businesses. The domestic and international markets are growing significantly in Chile and Perú. Of course LAN is the dominant carrier in these markets and is increasing frequencies on many domestic and international routes out of both LIM and SCL. LAN is also increasing point to point domestic flights in both Chile and Perú bypassing LIM and SCL, and will increase capacity on various routes due to the increase in traffic. LAN is phasing out the A-318s and will receive A-321s starting next year in order to increase capacity in these markets, as well as other markets. Also, LAN is increasingly operating certain regional routes with the B763s and has 12 more B763s on order.

It states that LAN and TAM will integrate their respective routes and will increase frequencies on more routes. It also states that some of the new routes will be within South America and some routes will be long-haul routes from GRU, GIG and from other cities in Latin America.

Quoting RAGAZZO777 (Reply 25):It seems like you need a subscription to El Mercurio to read that news article. Still, that's exciting news. Hopefully, London will be finally launched from LIM and/or SCL.

LAN has evaluated opening SCL-LHR and LIM-LHR to link up with British Airways at LHR. It would also enhance BA's network between LHR and South America. TAM currently operates GRU-LHR and GIG-LHR, thus LHR is already part of LATAM's network. However, obtaining slots at LHR is not an easy task...

I would not rule out LIM-BCN, SCL-BCN and/or SCL-GRU-BCN; especially if LATAM enters into a code-share agreement with VY. It should be noted that routes to/from South America and BCN also cater to VFR traffic. Rome is also being evaluated by LATAM. Routes such as SCL-FCO and/or SCL-GRU-FCO are viewed as "attractive".

LATAM's current route network to Europe with pertinent connections in South America:

Quoting SCL767 (Reply 3):LATAM's primary goal is to increase connectivity with-in South America by launching new regional routes and increasing frequencies on certain regional and domestic routes; and also to stimulate air travel with-in the region and into the region.

Both LAN and TAM have a good connectivity in South America at this time. What kind of routes would LATAM stimulate there in the future?

.

Quoting SCL767 (Reply 9):AV-TA-CM can hardly grow at GRU in order to provide feed to other Star carriers since the airport is highly congested

GRU is not a base for AV-TA-CM. The possibility would be Avianca Brasil even though they're not forming part of Star Alliance for the meantime.

On a conversation with Valor, Brazilian business newspaper, Enrique Cueto said that it's a possibility for LATAM to go completely independent, having LAN leave Oneworld and TAM leave Star.
On the same conversation, Mauricio Amaro said that LATAM will analyse TAP's sale conditions.

Quoting SJOtoLIR (Reply 29):Quoting SCL767 (Reply 3):
LATAM's primary goal is to increase connectivity with-in South America by launching new regional routes and increasing frequencies on certain regional and domestic routes; and also to stimulate air travel with-in the region and into the region.

Both LAN and TAM have a good connectivity in South America at this time. What kind of routes would LATAM stimulate there in the future?

Quoting SCL767 (Reply 35):Indeed, it will be very interesting to see how O6 expands their operations at São Paulo-Guarulhos; especially since GOL-Webjet and Azul-Trip have merged leaving O6 in the dust, so to speak.

DFW-GRU is planned to increase to 12x weekly, MIA-GIG is planned to increase to 2x daily, JFK-GRU is planned to increase to 2x daily. Yet some of these frequencies no longer appear in the schedule. Is this a slot issue at GRU?

Quoting C010T3 (Reply 31):On a conversation with Valor, Brazilian business newspaper, Enrique Cueto said that it's a possibility for LATAM to go completely independent, having LAN leave Oneworld and TAM leave Star.
On the same conversation, Mauricio Amaro said that LATAM will analyse TAP's sale conditions.

Well, TAM is definitively leaving Star - it is no longer legal for them to be in Star Alliance, period.

IMO, it would be stupid for LAN to leave OneWorld, but at the end of the day, OW needs LAN more than LAN needs OW.

Perhaps AA is "posturing" with LATAM or will reload the new frequencies to increase their dominance on the routes between the U.S. and Brazil. Also, TAM hasn't loaded their new frequencies into the U.S. as yet. LA has loaded their new frequencies already.

Currently, for the NW season LATAM will operate 94 weekly flights into MIA and 49 weekly flights into JFK:

The point is that Avianca Brasil is all what Star Alliance would find for their domestic flights.
I'm aware that its domestic coverage is not as extensive to compete with other airlines. Therefore, the growth of Avianca Brasil is necessary, in order to meet the standards of the alliance.

Quoting SJOtoLIR (Reply 45):Therefore, the growth of Avianca Brasil is necessary, in order to meet the standards of the alliance.

Considering that most Star carriers primarily operate into São Paulo-Guarulhos, how will O6 grow their operations at GRU in order to provide adequate connections? Also, when will O6 completely phase out their aging fleet of F-100s?

Quoting SCL767 (Reply 46):how will O6 grow their operations at GRU in order to provide adequate connections?

Well, it's very complicated to debate it.
Star Alliance will indeed lose a big chunk of the domestic market in Brazil and it could be very hard to replace it.
The departure of TAM from Star Alliance was always predictable given the imminent entrance of AV-TA-CM that was confirmed on June 21st.
Perhaps LAN-TAM was the elector, not Star Alliance. This topic is full of complexity because such group is able to work successfully in other regions of South America. However, the domestic market in Brazil will be one of their new weaknesses.

LAN was not involved in that decision since it is not part of Star. However, TAM would have objected since they are part of the Star Alliance; and is still a full member of the Star Alliance.

Quoting SJOtoLIR (Reply 47):This topic is full of complexity because such group is able to work successfully in other regions of South America. However, the domestic market in Brazil will be one of their new weaknesses.

The AV-TA group will have a lot of work to do in order to gain significant market-share in the Brazilian domestic and international markets due to the recent mergers of GOL-Webjet and Azul-Trip, plus the continuing increase of foreign carriers entering and increasing flights into Brazil. It would also be interesting to see LATAM and AviancaTaca bidding for TAP. The group also faces significant challenges in the Peruvian domestic and international markets and is very weak in the growing Chilean market. Also, LATAM does have a size-able presence in the Argentine domestic and international markets and LAN is beginning to increase flights in the Ecuadorian domestic and international markets.

Quoting C010T3 (Reply 43):Not, actually. They may stay for another 22 months.

Yes, I realize this. But not long term. The days are numbered, period. Are we going to really get into semantics on this one?

Quoting SJOtoLIR (Reply 47):Star Alliance will indeed lose a big chunk of the domestic market in Brazil and it could be very hard to replace it.

Star will basically see its share of the Brazilian domestic market drop from 35% to 5%, and its international share of the Brazilian market slide from 40% to 23% as a result of TAM's exit from the alliance, which indeed is huge.

I still maintain, however, that this does create an opportunity for Avianca Brasil to step up their game. Beforehand, TAM had precluded them from joining Star, not wanting two Brazilian carriers in the alliance, but now that barrier has been lifted. Avianca Brasil also already has access to GRU, which is huge, and is present on the core domestic trunk routes in Brasil.

Additionally, Avianca Brazil may be a potential buyer for TAP, which would be a huge boon for Star to maintain critical access/presence on the Brazil-Portugal corridor. Avianca Brazil indeed is eager to join Star and strategically speaking, remains a viable alternative for Star to hold onto Brazil.